Agent channel continues to gain momentum despite Hong Kong life insurance dip in 2023

New business premiums shrank 1.8%, but agent sales continue to gain traction amid year-long downturn in bancassurance and broker channels.

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Agent channel continues to gain momentum despite hong kong life insurance dip in 2023
Agent channel continues to gain momentum despite hong kong life insurance dip in 2023
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Agent channel continues to gain momentum despite hong kong life insurance dip in 2023

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(Re)in Summary

• Hong Kong’s life industry saw a 1.8% decrease in new business premiums in 2023.
• Agent channel continued its upward trend, contrasting bancassurance and brokers which saw a year long decline.
• HSBC Life led the market in new business premiums, securing an 18.9% market share with HK$34.1bn.
• Individual life and annuity (non-linked) business grew by 2.6%, while linked business and retirement scheme business lines saw declines of 16.8% and 34.3%, respectively.
• Claims and benefits paid to policyholders rose by 11.6% to HK$332.4bn.
• The number of new life insurance policies increased to 958,533 in 2023, up from 815,164 in 2022.
• Mainland Chinese visitors contributed HK$59bn in new business premiums, 32.6% of the individual business segment.

Hong Kong’s life insurance sector saw a 1.8% decline in new business premiums in 2023, with agents outperforming bancassurance and brokers channels in the final quarter, according to the Insurance Authority’s (IA) provisional data.

Agent sales have maintained a generally upward trend since Q1 2022, but in 2023 this rise coincided with a year-long downturn in sales by banks and parallel weakness in sales attributed to brokers.

While it’s too early to make final assumptions, the data may indicate a nascent shift in the patterns of distribution for life products in Hong Kong.

The omnipresent HSBC, through its HSBC Life operations, attained the top spot in terms of sales for long-term business lines. HSBC Life ranked first by new business premiums in 2023, securing an 18.9% share of the market.

“We are pleased to remain the number-one life insurer in Hong Kong, writing HK$34.1bn in new business premiums in 2023,” said Edward Moncreiffe, CEO of Hong Kong and Macau at HSBC Life, in a release in early March.

The results, said Moncreiffe, suggest the city “has successfully re-emerged as an international insurance centre and is the destination of choice for international customers in seeking out high-quality insurance policies.”

In the last quarter of 2023, agents wrote HK$12.7bn worth of new premiums, compared to HK$10.6bn written by banks and HK$10.1 billion written by brokers. Direct sales remain marginal, at HK$867.7m.

The data could underscore a potentially long-term change in the dynamics of the market, a change that may be accentuated by some weaknesses in yearly results.

While the IA has not yet released full annual industry-wide results, it did say in a release in early March that Hong Kong’s in-force long-term business generated HK$482.4bn in total premiums, down from HK$491.4bn in 2022.

The bulk of this business, HK$423.4 billion, came from the individual life and annuity (non-linked) business, which grew 2.6% year-on-year.

The individual life and annuity (linked) business brought in HK$23.6bn, down 16.8%. Retirement scheme business lines, an important savings vehicle for Hong Kong residents particularly through the Mandatory Provident Fund (MPF), saw a substantial 34.3% reduction to HK$29.3bn, heavily impacted by specific transactions that took place in 2022.

Meanwhile, the total claims and benefits paid to policyholders amounted to HK$332.4bn, up 11.6% compared to the previous year.

USD dominance

The US dollar remains the dominant currency in which policies are underwritten at HK$27.8bn, accounting for the vast majority of new business, and more than six times in terms of value that policies written in HKD in the last quarter of 2023 and almost 14 times as many as the HK$2bn in new business done in renminbi.

Annother industry-wide shift appears to be underway by this metric, with the value of new business written in the greenback, and to a lesser degree policies written in Renminbi, gaining ground at the expense of policies written in Hong Kong dollars, although it is worth noting that the HKD peg to the USD remains in force.

While the annual numbers suggest a small overall drop in in-force long-term business, the total number of new life insurance policies and amounts insured surged through 2023, according to the provisional data. Through 2023, some 958,533 new policies were written, up from 815,164 in 2022. The increase in new policies through the last year could mark the beginning of a recovery but was also 10% lower than in 2021 and 16% down from 2020.

On the other hand, in terms of the value of this new life business, the HK$612bn in new business insured was up from HK$413bn in 2022 and was also higher than the HK$539bn written in 2021 and HK$534bn in 2020.

Excluding retirement schemes, the city generated HK$181bn in new business premiums in 2023, according to the IA.

Of this, individual life and annuity (non-linked) business comprised HK$169.4bn, while individual life and annuity (linked) business contributed HK$11.2bn.

Additionally, around 30,000 qualified deferred annuity policies were underwritten for HK$1.9bn in premiums. This accounted for 1.1% of total new premiums in the individual lines.

Mainland Chinese visitors (MCV) also significantly boosted Hong Kong’s new business as cross-border travel resumed.

They contributed HK$59bn in new business premiums, representing 32.6% of the individual business segment. Close to 97% of these policies were regular interval pay contracts (non-single premium), with whole life, critical illness and medical policies making up approximately 55%, 34% and 4% respectively.

For example, AIA Hong Kong saw its value of new business increase 82% in 2023, largely attributed to resurgent demand from MCV following the full resumption of normal travel in February 2023.

“In 2023, Hong Kong saw a very strong return on MCV business, and we believe that this MCV customer demand is sustainable,” said Lee Yuan Siong, AIA’s Group Chief Executive and President. Lee added that the positive momentum from MCV sales in Hong Kong has continued into the first two months of 2024 with double-digit growth.

However, new business premiums derived from MCV declined 18.9% quarter-over-quarter in Q4 2023 to HK$12.1bn. This followed a steeper 32.9% drop quarter-on-quarter in Q3, suggesting the demand may be stabilizing after an uneven recovery throughout 2023 post-travel resumption.

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